Cogent Communications Holdings, Inc. · NASDAQ:CCOI
Cogent Communications — Q1 2024 Earnings Presentation
28 slides from Cogent Communications's earnings presentation, May 9, 2024
Slide 1: Investor Presentation
NASDAQ CCOI INVESTOR PRESENTATION
Slide 2: Cautionary Note Regarding Forward-Looking Statements; Non-GAAP Measures
Cautionary Note Regarding Forward‐Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events and are subject to risks and uncertainties. The forward-looking statements,
Slide 3: Company overview
company overview • We operate a global network carrying approximately 25% of Cogent is a all internet traffic • We offer high speed internet access to three customer bases: leading, global ― Corporate: 47% of revenues provider of ― Netcentric: 35% of revenues Internet ― Enterprise: 18% of revenues A
Slide 4: The on-net corporate IP & VPN opportunity
the on‐net corporate IP & VPN opportunity Market Players Cogent Advantages Competitors • Price per connection is relatively equivalent • Lumen Technologies • Bell Canada • Verizon • Comcast • Superior reliability: ring architecture; fiber; electronics • AT&T • Spectrum • 3x more reliable, on‐net, th
Slide 5: The off-net corporate IP & VPN opportunity
the off‐net corporate IP & VPN opportunity Market Players Cogent Advantages Competitors • Lumen Technologies • Bell Canada • Price per connection is relatively equivalent • Verizon • Comcast • Truly dedicated, non‐oversubscribed bandwidth • AT&T • Spectrum • Connected right to the heart of the inter
Slide 6: The netcentric IP opportunity
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 • CDNs National Q3 2011 Q4 2011 Competitors Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 • Arelion (prev. Telia) Q2 2015 • Lumen Technologies Q3 2015 • Access
Slide 7: The netcentric WAVE opportunity
the netcentric WAVE opportunity Market Players Cogent Advantages Competitors • Unique and physical diverse network along railways Global Regional • Cogent owns the fiber • Lumen Technologies • Windstream • Rapid provisioning • Zayo • Uniti • Crown Castle • Ubiquities locations Customers • Simplicity
Slide 8: The enterprise opportunity
the enterprise opportunity Market Players Cogent Advantages Competitors • Global IP Network in 53 countries • AT&T • BT Global Services • Large global salesforce • Verizon • Orange Business Services • Lumen Technologies • T Systems • Low cost connectivity • Verizon • Telephonica • Over 500 off‐net c
Slide 9: Customer segmentation
customer segmentation corporate netcentric enterprise Connections: 51,821 Connections: 61,599 Connections: 19,463 Revenue Revenue Revenue 47% 35% 18% Share: Share: Share: Traffic Share: 4.4% Traffic Share: 95.5% Traffic Share: 0.15% Geography: North America Geography: Global Geography: Global Profes
Slide 10: Highly focused sales organization
0 100 200 400 500 600 700 800 Q1 2010 Q2 2010 300 262 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Salesforce Growth Q1 2014 Q1 2010 – Q1 2024 Q2 2014 Q3 2014 Q4 2014 * Acquisition of Sprint Wireline business Q1 2015 Q2 2015 Q3 2015
Slide 11: Business breakout
business breakout 6% 4% 2%2%<1% 3% 2%1%1% 11% 19% 16% 31% 47% 54% 37% 35% 20% Q1 2024 26% 83% 4% 2% 2% 9% 46% 45% 96% 98% 98% Q1 2024 On Net Off Net 6% 5% <1% 6% 1%<1% 15% 8% 20% 8% 11% 10% 46% 39% 74% 39% 55% 21% 10% 26% Q1 2024 On-Net Netcentric On-Net Corporate VPN IP (DIA & Transit) US Europe Co
Slide 12: Broad, deep, scaleable network
broad, deep, scaleable network • Interconnected with 8,098 access networks • 1,338 metro networks; 27,600+ metro route miles • 3,321 On‐Net buildings • 98,000+ intercity fiber route miles • 56% multi‐tenant office buildings (1,861) • North America Up to 4,800 Gbps per city pair • 44% carrier neutral
Slide 13: Wavelength Services network
Wavelength Services network • Cogent currently provides wavelength services to customers in 104 locations with the capability in 419 locations • Cogent expects to offer wavelength services in over 800 locations by year end 13
Slide 14: Network architecture IRU/owned fiber
network architecture IRU/owned fiber • Longhaul and metro backbone is built from a diverse set of 328 IRU suppliers • Owned fiber allows unique rights of way • IRUs from 10 to 44 years; many are pre‐paid and have diverse end dates Our network is • O+M expenses are calculated by share of fiber pairs
Slide 15: Cogent's network advantage
cogent’s network advantage Choice Implication • Simple, predictable performance IP over DWDM • Lowest cost network Cogent’s Simple Vendor / • ‘Southwest Airlines’ cost and Configuration operating advantages network offers LT Lease of Fiber Pairs • Reduced capital intensity and operating costs substa
Slide 16: Big, diverse & balanced global IP network
big, diverse & balanced global IP network Access to Business/Residential Leading Share of Content Customers Worldwide Providers • 51,821 corporate connections • OTT Media Services primarily in North America • Gaming Providers • In 1,861 On‐Net MTOBs • CDN Networks • 25,919 Off‐Net Buildings • 1,664
Slide 17: Proven integration execution
proven integration execution Investment Customers Addresses Network Building Original Peering Access PP&E Date IPv4 NetRail Sep 2001 $180 $35 Cogent Allied Riser Feb 2002 $590 $335 purchased over PSINet* (Fiber Network Solutions, Inc) FNSI Apr 2002 Feb 2003 $5,180 $30 $2,175 $5
Slide 18: Revenue growth
‐5% ‐3% ‐1% 11% 13% 15% 1% 3% 5% 7% 9% ‐10% ‐5% 0% 5% 10% 15% Q1 2010 Q1 2010 Q2 2010 Q2 2010 Q3 2010 Q3 2010 Q4 2010 Q4 2010 Q1 2011 Q1 2011 Q2 2011 Q2 2011 Q3 2011 Q3 2011 Q4 2011 Q4 2011 **Q1 2012 Sequential Q1 2012 Q2 2012 Q2 2012 Q3 2012 Q3 2012 Q4 2012 Q4 2012 Q1 2013 Q1 2013 Q2 2013 Q3 2013 Q
Slide 19: Historical & continuing margin expansion
$‐ $50 $100 $150 $200 $250 $300 $50 $0 $100 $150 $200 $250 $300 $350 $400 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 ($ in millions) Q3 2012 Wave revenue On net revenue Q4 2012 Q1 2013 Q1 2010 – Q1 2024 2010 – 2024 YTD Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2
Slide 20: Investing: increasing returns, demand driven, all funded internally
investing: increasing returns, demand driven, all funded internally 200 Capital Expenditures and Principal Payments on IRU Finance (Capital) Leases 180 ($ in millions) 2010 – 2024 YTD 77.4 160 140 120 100 45.5 80 23.1 18.2 24.0 129.6 60 19.1 15.5 16.8 11.2 11.2 10.3 9.1 79.0 23.2 20.2 12.5 40 52.8 4
Slide 21: Highlights
highlights ($ in millions) Q1 Q2 Q3 Q4 Q1 Q/Q % Y/Y % 2023 2023* 2023 2023 2024 Change Change On‐Net Revenue $116.1 $127.7 $129.0 $138.1 $138.6 0.4% 19.4% Off‐Net Revenue $37.3 $102.0 $130.6 $123.7 $118.2 (4.4)% 217.0% Wavelength Revenue $‐ $1.6 $3.0 $3.1 $3.3 7.0% NM Non‐Core Revenue $0.2 $8.6 $12.
Slide 22: Highly disciplined allocator of capital
highly disciplined allocator of capital • M&A Discipline: Cogent has evaluated and passed on 825 acquisitions since 2005. • Sprint (T‐Mobile Wireline) Acquisition: Cogent paid $1 for the Purchased Interests Cogent is o Less a commitment from T‐Mobile to purchase $700 Million in IP Transit services f
Slide 23: Consistent return of capital; modest leverage
consistent return of capital; modest leverage Cumulative Total Return of Capital by type ($M) $1,500 $1,000 $500 $‐ 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD *Includes June 2007 Note Transaction Cumulative Total Share Buyback Cumulative Total Divi
Slide 24: Investment highlights
investment highlights • Fundamentals provide for continued, consistent growth and profitability • Focused on fastest growth products in Telecommunications • Independent, low‐cost global network Cogent is a • Network footprint targeted at high traffic locations • Three attractive customer bases; Corp
Slide 25: Cogent Communications Holdings, Inc.
Cogent Communications Holdings, Inc.
Slide 26: Appendix
Appendix Reconciliation of non‐GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP 26
Slide 27: Non-GAAP EBITDA reconciled to GAAP cash flows from operating activities
Non‐GAAP EBITDA and non‐GAAP EBITDA, as adjusted, reconciled to GAAP cash flows provided by operating activities Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 ($ in 000’s) – unaudited Net cash flows provided by operating activities $35,821 $82,654 $(52,433) $(48,701) $19,219 Changes in operating assets an
Slide 28: ESG efforts
ESG efforts Cogent is focusing on its ESG performance and improving and broadening its disclosure: Cogent is Environmental • Provided detailed performance characteristics and carbon footprint related to its Network Backbone focused on • • Carbon emissions from Network Backbone declined in 2022 75% r
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